Correlation Between Merck and Keros Therapeutics
Can any of the company-specific risk be diversified away by investing in both Merck and Keros Therapeutics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Merck and Keros Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Keros Therapeutics, you can compare the effects of market volatilities on Merck and Keros Therapeutics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Merck with a short position of Keros Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Keros Therapeutics.
Diversification Opportunities for Merck and Keros Therapeutics
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Keros is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Keros Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keros Therapeutics and Merck is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Merck Company are associated (or correlated) with Keros Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keros Therapeutics has no effect on the direction of Merck i.e., Merck and Keros Therapeutics go up and down completely randomly.
Pair Corralation between Merck and Keros Therapeutics
Considering the 90-day investment horizon Merck Company is expected to generate 0.41 times more return on investment than Keros Therapeutics. However, Merck Company is 2.44 times less risky than Keros Therapeutics. It trades about -0.22 of its potential returns per unit of risk. Keros Therapeutics is currently generating about -0.09 per unit of risk. If you would invest 10,638 in Merck Company on August 24, 2024 and sell it today you would lose (652.00) from holding Merck Company or give up 6.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Keros Therapeutics
Performance |
| Timeline |
| Merck Company |
| Keros Therapeutics |
Merck and Keros Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Keros Therapeutics
The main advantage of trading using opposite Merck and Keros Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Keros Therapeutics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Keros Therapeutics will offset losses from the drop in Keros Therapeutics' long position.| Merck vs. Johnson Johnson | Merck vs. Small Cap Core | Merck vs. Freedom Holding Corp | Merck vs. Gfl Environmental Holdings |
| Keros Therapeutics vs. ZyVersa Therapeutics | Keros Therapeutics vs. Sonnet Biotherapeutics Holdings | Keros Therapeutics vs. Zura Bio Limited | Keros Therapeutics vs. Phio Pharmaceuticals Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |